A bill working its way through the state Legislature would eliminate a property tax on business equipment that the bill’s co-sponsor calls “double taxation,” but that loss of revenue could bring down funding for local governments.

Under the bill, the state’s businesses and manufacturers would still pay property taxes on the land they operate in — an amount that totaled more than $2 billion in 2014, according to the Legislative Fiscal Bureau.

The bill, however, targets personal property, which the LFB says are “items not fixed to land, such as furniture, equipment, machinery and fixtures.”

In 2014, those taxes totaled about $270 million, with businesses and manufacturers making up about $265 million of that.

The bill’s co-sponsor, Sen. Tom Tiffany, R-Hazelhurst, said he’s heard from small businesses that they would almost certainly reinvest those funds in other equipment to improve their business.

Those small businesses, he said, would benefit the most from this bill, as they need to pay sales taxes for the equipment they purchase on top of the personal property taxes for that equipment.

“It is kind of double taxation, is what it is,” Tiffany said.

Jerry Deschane, the executive director of the League of Wisconsin Municipalities, said with the loss of personal property tax, the tax burden could be shifted from businesses to the rest of the property taxes, much of that coming from residential property taxes.

An LFB analysis last year on the topic found the net property tax bill on the average Wisconsin home could increase by 2.7 percent, or $80.

But Tiffany said lawmakers would find a way to make sure that tax shift wouldn’t happen, raising the possibility of local governments backfilling the revenues they would lose.

Another source of revenue local governments would lose under the bill are about $80 million the state currently pays local governments, Deschane said. Those payments stem from the exemption of computers from personal property taxes, with the state paying the local governments for that revenue loss.

Tiffany said the bill wouldn’t take effect until 2020, saying he wants to phase in the bill so local governments can adjust to the loss in revenue.

The bill, he added, would relieve some of the burden for tax assessors, as significant amounts of effort go into filing and assessing the personal property taxes that end up generating little revenue.

“The personal property tax is one of the most inefficient taxes that we have in Wisconsin,” Tiffany said.

Deschane agreed the assessing process for personal property tax was “cumbersome.”

“The sponsors of the bill are right that the paperwork is a bit of a hassle,” Deschane said. “Our perspective is, we agree with that and if there was a way to do away with it without crippling local governments, we would be there with them.”